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Investing in Kenya, post-Westgate

As the ICC case progresses, UK-Kenya political and military relations are straining

Global Risk and Investigations Practice

December 19, 2013

Ten weeks after the devastating terrorist attack on the Westgate Centre, attention is now turning towards Kenya’s longer term prospects as an investable country. A veritable hub of East Africa, Kenya remains an exciting prospect; however recent events give rise to serious concerns. One aspect of this relates to security considerations, but perhaps the bigger question is how the Kenyatta leadership perceives itself in relation to the international community, and how this perception is likely to affect investment partnerships in the future.

For traditional western investors the news is unsettling: Kenya appears to be repositioning itself at the expense of strategic political relationships with the EU and the US. The sticking point is the International Criminal Court (ICC) and accusations of the Kenyan leadership’s direct involvement in post-electoral violence in 2007-2008, which left more than 1000 dead. President Kenyatta’s rhetoric lambasting the Europeans for their lack of support over the case has, according to our sources, been followed by official threats to cancel Britain’s contract for military training in Kenya.

Such a move would have far-reaching consequences for the bilateral relationship as well as for Kenya’s own ability to handle growing security threats in the country and the region. For western investors, it is not yet clear whether a cooling in political relationships will directly affect their chances of success, although it does seem apparent that Chinese and African investors may find favour over their western competitors. Kenyatta has made explicit reference to Kenya opening itself to a new set of partners, and one which does not include those former, traditional and ‘colonialist’ powers.

It is now clear that Kenya will seek to make those it feels are responsible for the ICC process pay in both political and commercial terms. This new reality is one which western businesses should take account of when considering entering the Kenyan market. There is no reason yet to assume the political difficulties between Kenya and its traditional partners cannot be resolved; but the stakes have just become much higher.